Currently methods of alternative energy are advertised as the solutions to all of the energy crises that are currently occurring in our society. Unfortunately it is not as easy as it is all advertised to be. Focusing on wind energy as a method of green energy production, it is not completely economically sustainable to make it competitive with conventional methods such as fossil fuels on its own. There are many factors which play into the reason that winde energy is not as sustainable as one might think.
“ Generally, the cost of generating electricity is made up from,
· Capital cost—building the power plant and connecting it to the grid,
· Running costs—operating, fuelling, and maintaining the plant, and finally,
· Financing—the cost of repaying investors and banks.
For wind turbines, there are no fuel costs, as the wind is free. Once the project has been paid for, the only ongoing expenses are for operation and maintenance. The capital cost is between 75 and 90% of the total.” (Progress and Recent Trends in Wind Energy
“The lower capacity factor of wind power means that to produce a given quantity of electricity, it is necessary to install 2–2.5 times more generating capacity than with fossil fuel plants. This tends to make wind energy more expensive in the initial phase of the life cycle. On the other hand, there is no fuel cost during the lifetime of a wind power generating plant.” (Progress and Recent Trends in Wind Energy)
These two experts from the studies done on the economics of wind energy both show that the largest issues with developing wind energy are the costs of the initial installation of the wind farms. Once the farms themselves have been successfully integrated into the system, the costs of generating the electricity from wind power is only the upkeep and maintenance of the wind farm, which consists of only between 10-25% of the entire system price.
Now when wind energy first entered the market of renewable energy, the prices for energy production were outrageous. ”Over the past 5 years alone, costs have reduced by some 20%. Wind is already competitive with new coal-fired plants and in some locations it can challenge gas, currently the cheapest option. The production cost of a kilowatt hour (kWh) of wind power is one fifth of what it was 20 years ago. In 1982, the average list price of Danish-produced wind turbines was 1770 US$/kW, and in 1997 the average price reduced to 850 US$/kW” (Progress and Recent Trends in Wind Energy)
Although the overall price of wind produced electricity has fallen through the costs of the construction of the wind farms, it is still not economically sustainable to the level where it can successfully compete with conventional methods of electricity generation such as coal and natural gasses. As many states across the country are beginning to mandate how much of the state electricity must be obtained through renewable sources, the need to support sources such as wind farms becomes even more important. “The RPS, which was signed into law (SB 1078) by Governor Gray Davis in the fall of 2002, requires California’s three investor-owned utilities to obtain 20 percent of their power from renewable sources by 2017.” (Policies and Market Factors Driving Wind Power Development in the United States)
The government has issued several was in the past for companies to invest in wind energy although at first glance is a losing economic situation to do so. An example of this would be the Federal Energy Tax Credit for companies that resurrect wind turbines in order to aid to needing power grid. “Federal Production Tax Credit, which is an inflation-adjusted per-kWh credit applied to the output of a qualifying facility during the first 10 years of its operation. During calendar year 2002, qualifying wind generators earned an inflation-adjusted production tax credit of 1.8 /c/kWh.” (Policies and Market Factors Driving Wind Power Development in the United States) This tax credit ws designed as an incentive for the investment of organizations into wind energy, and an attempt to make up for the high costs of such an investment. Public utilities were also offered this same rate of a 1.8/c/kWh tax credit if they chose to support such a system.
All of these systems work well when the country is in fine economic standing,but due to the recent times this country has entered in a position where these funds are not as abundant as they once were and can not be offered or supported entirely. ” Access to capital has become restricted because many energy companies are already burdened with excessive amounts of debt and have sub-par credit ratings.” (Policies and Market Factors Driving Wind Power Development in the United States) Many of the tax credit systems have been revoked or now go under a method of submission where they are reviewed and decided if they now meet a stricter criteria in order to be eligible for the governmental tax incentive.
Solution that is partially being implemented:
Without these government aided services the issue at hand rise again and the focus comes back to the “major challenge faced by wind power industry and policy makers is to find a cost effective way of exploiting massive amounts of wind power over the next decade… Larger power systems primarily use nuclear, fossil, natural gas or hydro units that generate power at a lower cost than the WTG units.” (Renewable Energy Credit Driven Wind Power Growth for System Reliability ) To overcome this financial situation the United States government has developed a concept entitled a Renewable Energy Credit, or also referred to ass green tags, renewable energy certificates, or RECs. The creation of such a concept was generated to tap the economic source of the general public to overcome the financials to ensure that wind energy becomes self sustainable until it becomes competitively priced against conventional methods on its own. RECs “are tradable, non-tangible energy commodities in the United States that represent proof that 1 megawatt-hour (MWh) of electricity was generated from an eligible renewable energy resource.” (Renewable Energy Credits)
“The renewable energy credit (REC) [4] market assigns monetary values to the environmental benefits obtained from offsetting conventional fuel. REC are traded in the market, and customers that do not have physical access to renewable sources can still purchase ‘green’ power.” (Renewable Energy Credit Driven Wind Power Growth for System Reliability)
So in layman’s terms, a REC is a intangible object that can be purchased by a home owner that states that for every unit of electricity that is used within their home, that they are paying the monetary difference of that same amount of energy to be created from wind energy, making it competitively priced against conventional methods. The owner of the REC does not have direct access to this energy, but is supporting that that amount of energy is being supplied to the grid at a competitive rate.
My Solution:
The issue at hand that I am trying to solve is that this system is so much more complicated than what it comes off as when campaigns across this country are trying to get people to join the movement of support sustainable energy. Messages are being delivered that are leading to the captive audience wanting to do something for the greening of our society, but there is nothing more that is being delivered besides the message. Being a viewer who has been susceptible to these messages, I have found myself in many situations wanting to take actions to improving my overall carbon impact but feeling stranded and not knowing what to do or where to begin. Not even owning a house I would want to begin promoting the support of such things as RECs to my family and friends, but do not know where to guide them to begin to take such actions. Considering myself an individual who is fairly knowledgeable about this topic and still not knowing where to begin, I can only imagine what the first time viewers feel like.
To counter act this large area of confusion I am suggesting a nationwide educational effort to inform the public of the entirety of such renewable systems as wind energy and all that is involved with Renewable Energy Credits. The option for individual home owners to participate in programs and purchase RECs are available, but they themselves are not advertised to the public. The current method of public informing of such systems is “grassseeding” work, which is tabling at convention and public events with employees informing curious individuals and having the ability to register them for the nationwide REC system if provided with their utility account number. This is effective yet the amount of manpower to make this a sufficient method of public informing would be outrageous.
The governmental education system would compose of a network of statewide systems that would be responsible for traveling throughout the state presenting at town council meetings, public events, and sort of public gathering to express the concept of the REC and wind energy generation. It is vital to explain to the general public how their support is vital for the continuation and success of wind energy, and the ease of enrolling people would allow these information deliverers to sign people up on the spot allowing for the public support to grow easily and rapidly. The largest issue with this concept is the fact that it would require individuals to pay more for their electricity, but this can easily be decreased through a mass acceptance of the REC system which would drive the individual cost down significantly as more people enrolled. Through proper networking and nationwide efforts, wind energy costs can easily be taken care of through public support and alternative sources would become competitive and eventually cheaper than conventional methods of electricity generation. All of the credentials are available; the only thing that is needed is a more efficient method of getting the proper information to the public so they are fully aware of how effective wind energy can be and how their support can make all of the difference.
Beyond the system that would educate individuals on the REC system, a system of governmental incentives tailored to private home owners would only promote the home owner support of the REC system, if sufficient funds are available in the economic standing. Such methods that are currently used in Denmark, which issue individuals who invest in wind energy technologies a slight tax credit each year, could be a drawing point at these meetings in which educational seminars are given to encourage people to commit on the spot. This sight incentive much like the ones used to bring in corporate followers could be the extra incentive that draws some supporters that are still skeptical of the financial aspect of becoming involved with purchasing RECs.
Conclusion:
Through the implementation of the nationwide education system along with the tax incentives when economic times are well off, this overall education system would allow for the support of wind energy technologies to grow exponentially compared to current growth rates. With the falling prices of the wind energy production, this increase of support that would be brought from this system would cause the prices to fall even further, bringing sustainable wind energy prices to levels that would be competitive and beneficial over current traditional methods such as coal and natural gas.
Renewable Energy Credit Public Education
Picture Location
Current issue:
Currently methods of alternative energy are advertised as the solutions to all of the energy crises that are currently occurring in our society. Unfortunately it is not as easy as it is all advertised to be. Focusing on wind energy as a method of green energy production, it is not completely economically sustainable to make it competitive with conventional methods such as fossil fuels on its own. There are many factors which play into the reason that winde energy is not as sustainable as one might think.
“ Generally, the cost of generating electricity is made up from,
· Capital cost—building the power plant and connecting it to the grid,
· Running costs—operating, fuelling, and maintaining the plant, and finally,
· Financing—the cost of repaying investors and banks.
For wind turbines, there are no fuel costs, as the wind is free. Once the project has been paid for, the only ongoing expenses are for operation and maintenance. The capital cost is between 75 and 90% of the total.” (Progress and Recent Trends in Wind Energy
“The lower capacity factor of wind power means that to produce a given quantity of electricity, it is necessary to install 2–2.5 times more generating capacity than with fossil fuel plants. This tends to make wind energy more expensive in the initial phase of the life cycle. On the other hand, there is no fuel cost during the lifetime of a wind power generating plant.” (Progress and Recent Trends in Wind Energy)
These two experts from the studies done on the economics of wind energy both show that the largest issues with developing wind energy are the costs of the initial installation of the wind farms. Once the farms themselves have been successfully integrated into the system, the costs of generating the electricity from wind power is only the upkeep and maintenance of the wind farm, which consists of only between 10-25% of the entire system price.
Now when wind energy first entered the market of renewable energy, the prices for energy production were outrageous. ”Over the past 5 years alone, costs have reduced by some 20%. Wind is already competitive with new coal-fired plants and in some locations it can challenge gas, currently the cheapest option. The production cost of a kilowatt hour (kWh) of wind power is one fifth of what it was 20 years ago. In 1982, the average list price of Danish-produced wind turbines was 1770 US$/kW, and in 1997 the average price reduced to 850 US$/kW” (Progress and Recent Trends in Wind Energy)
Although the overall price of wind produced electricity has fallen through the costs of the construction of the wind farms, it is still not economically sustainable to the level where it can successfully compete with conventional methods of electricity generation such as coal and natural gasses. As many states across the country are beginning to mandate how much of the state electricity must be obtained through renewable sources, the need to support sources such as wind farms becomes even more important. “The RPS, which was signed into law (SB 1078) by Governor Gray Davis in the fall of 2002, requires California’s three investor-owned utilities to obtain 20 percent of their power from renewable sources by 2017.” (Policies and Market Factors Driving Wind Power Development in the United States)
The government has issued several was in the past for companies to invest in wind energy although at first glance is a losing economic situation to do so. An example of this would be the Federal Energy Tax Credit for companies that resurrect wind turbines in order to aid to needing power grid. “Federal Production Tax Credit, which is an inflation-adjusted per-kWh credit applied to the output of a qualifying facility during the first 10 years of its operation. During calendar year 2002, qualifying wind generators earned an inflation-adjusted production tax credit of 1.8 /c/kWh.” (Policies and Market Factors Driving Wind Power Development in the United States) This tax credit ws designed as an incentive for the investment of organizations into wind energy, and an attempt to make up for the high costs of such an investment. Public utilities were also offered this same rate of a 1.8/c/kWh tax credit if they chose to support such a system.
All of these systems work well when the country is in fine economic standing,but due to the recent times this country has entered in a position where these funds are not as abundant as they once were and can not be offered or supported entirely. ” Access to capital has become restricted because many energy companies are already burdened with excessive amounts of debt and have sub-par credit ratings.” (Policies and Market Factors Driving Wind Power Development in the United States) Many of the tax credit systems have been revoked or now go under a method of submission where they are reviewed and decided if they now meet a stricter criteria in order to be eligible for the governmental tax incentive.
Solution that is partially being implemented:
Without these government aided services the issue at hand rise again and the focus comes back to the “major challenge faced by wind power industry and policy makers is to find a cost effective way of exploiting massive amounts of wind power over the next decade… Larger power systems primarily use nuclear, fossil, natural gas or hydro units that generate power at a lower cost than the WTG units.” (Renewable Energy Credit Driven Wind Power Growth for System Reliability ) To overcome this financial situation the United States government has developed a concept entitled a Renewable Energy Credit, or also referred to ass green tags, renewable energy certificates, or RECs. The creation of such a concept was generated to tap the economic source of the general public to overcome the financials to ensure that wind energy becomes self sustainable until it becomes competitively priced against conventional methods on its own. RECs “are tradable, non-tangible energy commodities in the United States that represent proof that 1 megawatt-hour (MWh) of electricity was generated from an eligible renewable energy resource.” (Renewable Energy Credits)
“The renewable energy credit (REC) [4] market assigns monetary values to the environmental benefits obtained from offsetting conventional fuel. REC are traded in the market, and customers that do not have physical access to renewable sources can still purchase ‘green’ power.” (Renewable Energy Credit Driven Wind Power Growth for System Reliability)
So in layman’s terms, a REC is a intangible object that can be purchased by a home owner that states that for every unit of electricity that is used within their home, that they are paying the monetary difference of that same amount of energy to be created from wind energy, making it competitively priced against conventional methods. The owner of the REC does not have direct access to this energy, but is supporting that that amount of energy is being supplied to the grid at a competitive rate.
My Solution:
The issue at hand that I am trying to solve is that this system is so much more complicated than what it comes off as when campaigns across this country are trying to get people to join the movement of support sustainable energy. Messages are being delivered that are leading to the captive audience wanting to do something for the greening of our society, but there is nothing more that is being delivered besides the message. Being a viewer who has been susceptible to these messages, I have found myself in many situations wanting to take actions to improving my overall carbon impact but feeling stranded and not knowing what to do or where to begin. Not even owning a house I would want to begin promoting the support of such things as RECs to my family and friends, but do not know where to guide them to begin to take such actions. Considering myself an individual who is fairly knowledgeable about this topic and still not knowing where to begin, I can only imagine what the first time viewers feel like.
To counter act this large area of confusion I am suggesting a nationwide educational effort to inform the public of the entirety of such renewable systems as wind energy and all that is involved with Renewable Energy Credits. The option for individual home owners to participate in programs and purchase RECs are available, but they themselves are not advertised to the public. The current method of public informing of such systems is “grassseeding” work, which is tabling at convention and public events with employees informing curious individuals and having the ability to register them for the nationwide REC system if provided with their utility account number. This is effective yet the amount of manpower to make this a sufficient method of public informing would be outrageous.
The governmental education system would compose of a network of statewide systems that would be responsible for traveling throughout the state presenting at town council meetings, public events, and sort of public gathering to express the concept of the REC and wind energy generation. It is vital to explain to the general public how their support is vital for the continuation and success of wind energy, and the ease of enrolling people would allow these information deliverers to sign people up on the spot allowing for the public support to grow easily and rapidly. The largest issue with this concept is the fact that it would require individuals to pay more for their electricity, but this can easily be decreased through a mass acceptance of the REC system which would drive the individual cost down significantly as more people enrolled. Through proper networking and nationwide efforts, wind energy costs can easily be taken care of through public support and alternative sources would become competitive and eventually cheaper than conventional methods of electricity generation. All of the credentials are available; the only thing that is needed is a more efficient method of getting the proper information to the public so they are fully aware of how effective wind energy can be and how their support can make all of the difference.
Beyond the system that would educate individuals on the REC system, a system of governmental incentives tailored to private home owners would only promote the home owner support of the REC system, if sufficient funds are available in the economic standing. Such methods that are currently used in Denmark, which issue individuals who invest in wind energy technologies a slight tax credit each year, could be a drawing point at these meetings in which educational seminars are given to encourage people to commit on the spot. This sight incentive much like the ones used to bring in corporate followers could be the extra incentive that draws some supporters that are still skeptical of the financial aspect of becoming involved with purchasing RECs.
Conclusion:
Through the implementation of the nationwide education system along with the tax incentives when economic times are well off, this overall education system would allow for the support of wind energy technologies to grow exponentially compared to current growth rates. With the falling prices of the wind energy production, this increase of support that would be brought from this system would cause the prices to fall even further, bringing sustainable wind energy prices to levels that would be competitive and beneficial over current traditional methods such as coal and natural gas.
Works Cited
Bird, Lori, Mark Bolinger, and Troy Gagliano. "Policies and Market Factors Driving Wind Power Development in the United States." ScienceDirect - Home. Web. 26 Apr. 2010. <http://www.sciencedirect.com/science?_ob=MImg&_imagekey=B6V2W-4BRSFC9-1-1&_cdi=5713&_user=659639&_pii=S0301421503003835&_orig=search&_coverDate=07%2F31%2F2005&_sk=999669988&view=c&wchp=dGLzVlz-zSkzS&md5=0759dfe8a66ad3517e8fd186ee24e56c&ie=/sdarticle.pdf>. Policies and Market Factors Driving Wind Power Development in the United States
Heberling, Michael. "Mandating Renewable Energy: It?s Not Easy Being Green." The Freeman | Ideas On Liberty. Web. 27 Apr. 2010. <http://www.thefreemanonline.org/featured/mandating-renewable-energy-its-not-easy-being-green/>.
Karki, Rajesh. "Renewable Energy Credit Driven Wind Power Growth for System Reliability." RensSearch: Rensselaer Libraries - Proxy Login. Web. 26 Apr. 2010. <http://www.sciencedirect.com.libproxy.rpi.edu/science?_ob=ArticleURL&_udi=B6V30-4KTVP0W-1&_user=659639&_coverDate=05%2F31%2F2007&_alid=1310339942&_rdoc=1&_fmt=high&_orig=search&_cdi=5716&_sort=r&_docanchor=&view=c&_ct=1&_acct=C000035878&_version=1&_urlVersion=0&_userid=659639&md5=8e67c1ac1eb98cf7200091db0e811a6a>. Renewable Energy Credit Driven Wind Power Growth for System Reliability
"Renewable Energy Certificates." Wikipedia, the Free Encyclopedia. Web. 27 Apr. 2010. <http://en.wikipedia.org/wiki/Renewable_Energy_Certificates>. Renewable Energy Credits
Sahin, Ahmet D. "Progress and Recent Trends in Wind Energy." ScienceDirect - Home. Web. 27 Apr. 2010. <http://www.sciencedirect.com/science?_ob=MImg&_imagekey=B6V3W-4CX01CM-1-1&_cdi=5741&_user=659639&_pii=S0360128504000371&_orig=search&_coverDate=12%2F31%2F2004&_sk=999699994&view=c&wchp=dGLzVzb-zSkWA&md5=945ba45c1e238cc0d92872cbae0532b2&ie=/sdarticle.pdf>. Progress and Recent Trends in Wind Energy